As the World Faces Economic Crisis

＊This article was originally written in Japanese by our CEO, Yoshihide Arai.

It was reported the other day that a state of emergency has been declared due to the COVID-19, and there is a high possibility that it will be extended.
How is everyone doing?

Personally, as I’ve been sending out a lot on Facebook, I’ve seen a lot of discrepancies, although people from different positions have expressed their theories from different perspectives.

It is important to think, make predictions, and make decisions based on the data we already have, not to mention the fact that this is an unknown virus, and while listening to the opinions of experts in infectious diseases, I believe that the government, as the manager of the country, should be responsible for making decisions on how Japan should respond.

Nowadays in Japan, I feel that the majority of people are pulled too much by the opinions of experts and the media has been agitating too much, which leads to a distorted perception of the facts.

Of course, it’s not hard to understand that if they don’t do so, the mood of self-restraint will disappear and there will be an outbreak of infection, but I think Japanese people will understand if the facts are properly explained and logically conveyed.

The most important thing is to keep the economy going while preventing the collapse of medical care.

In fact, the reason why I posted a blog for the first time in a long time was not because I wanted to write about anti-COVID-19 measures, but because I wanted to write about how facing a crisis like this can bring up an opportunity to rethink the nature of management.

In recent years, “excessive capitalism” and “bankruptcy due to shareholder-orientated management” have been argued
and have become increasingly prominent in the media and among experts. One of the reasons for this may be that the global economic downturn caused by COVID-19 has exposed the fragility of management that is focused too much on increasing shareholder value.

After experiencing the greatest hardship of my life due to the Lehman Brothers’ collapse, I have been thinking about the purpose and existence of a company and what management is all about. The conclusion I have come to is that a company exists to make everyone who is involved happy. Management is about making everyone happy and making an effort to expand the circle (the scope of impact and the number of people involved). This is what I came to believe.

In my opinion, everyone involved in the company is not only employees, customers and shareholders, but also society at large. I believe that it is a must for a company to make everyone who is involved happy, but is also ideal if we can expand the scope of our influence.

To be more specific, if you and your wife run a small restaurant that serves delicious food that makes customers happy, runs a solid and healthy business, and even pays taxes, this makes everyone who is involved happy and is a wonderful existence. Now it’s up to them to decide if they want to take on the challenge of expanding their scope of influence, based on their own sense of purpose and values.

On the other hand, even if a company’s sales are high, if employees are not happy and customers are not getting value from the company, then the company does not meet the requirements of a company’s existence so they should improve immediately.

Because any age is uncertain, what is important is to continue to make steady and humble effort to make the people who are involved with our company happy, which I believe is the universal and essential meaning of management.

With this very idea in mind, all of us at Atrae have worked together to achieve happiness for ourselves and the people we interact with. No matter how well we have grown or how well we have been doing, we have never been conceited, but have always been willing to try and improve. For instance, we have focused on productivity, job satisfaction and customer satisfaction more than short-term sales.

As a result of these efforts and challenges, we have been able to generate profits with a certain level of capital efficiency while maintaining an extremely sound financial base with a rough ROE of more than 10% and a capital adequacy ratio of approximately 90%.

There were times when we were compared to many other companies in terms of the speed of sales growth and the timing of their IPOs, and it was frustrating for us that we didn’t get the recognition we deserved. At times, we were criticized for holding too much cash and that we should return it to shareholders. Nevertheless, the company’s purpose and reason of existence is to make everyone who is involved happy, so we have continued to hold on to our beliefs with a strong will, if that is necessary.
There have been various management theories in different times, but I believe that the principles have always been the same.

I believe that this COVID-19 outbreak has once again brought the argument on the management of companies and excessive capitalism, which, in my opinion, will lead to a world where companies that engage in activities that are beneficial and valuable to human society will be the ones that are valued.